Zooming out (3-day/weekly) on the charts of some of the major exchanges today shows flattening / decline in volume, particularly with respect to the prior two major legs up in price (end-March to end-May; mid-July to end-August) – while the price is going up the volume is changing direction. Note: for this analysis I can't take seriously the charts from either new exchanges (customer uptake skews things) or exchanges that have suffered major setbacks during the last year (Chinese exchanges with their huge drop in volume in 2016 due to heat from regulators calling an end to wash trades; Bitfinex with the major hack a year ago and subsequent drop off and re-uptake of customers). To get a good idea of demand one has to pick the exchanges that have run as smoothly as possible throughout the period in question, such Kraken and Bitstamp. As this decline in volume is witnessed the weekly MAC-D indicators of the exchanges shows that unless a significantly heavy week of buying materialises now, a move into red territory will happen on October 2. The last time MAC-D was in the red was in March, with no significant time spent in the red since this time in 2016. In brief a correction here is well due.
The mid-term view backs up the view that buying pressure is significantly weakening – the daily charts show that the bounce started on September 15, while creating a significant green volume bar, has not continued with nearly as much vigour as the bounce that began on July 17. Indeed the volume of 15 September was likely caused by shorts closing, not long-term buying, a factor that will act to lessen any possible “short squeeze” if the price does go back up.
Something that some traders watch for to assess bullish pressure is a strong start to the beginning of the week, the logic being that deposits made at the end of the prior week can take several days to be credited, leading to a build up that creates strength early in the week. So far, the buying pressure has been very lacklustre this Monday September 25. This is an inexact way to analyse the market to say the least, but it is nevertheless one thing to keep an eye on, among many other factors.
Finally, zooming back out, the most important thing to consider is the current risk/reward of taking a long-term trade. Reading the analysis of other traders on tradingview one can see various bullish views. To keep realistic and within a reasonable long-term view (ie months / years rather than decades) we have to discard the projections for tens of thousands of dollars per Bitcoin upwards. So (ignoring short views) we are left with long views from traders who project possible new highs of somewhere between $5,000 and $8,000. The problem here is RISK/REWARD.
For anyone who has been investing or trading in Bitcoin for significant time (1 year plus) the prospect of going from $3,750 to $6,000 is nothing special! Don't get me wrong – for any normal investment it is a great return, but for the long-time Bitcoiners / crypto-enthusiasts (who also hold a much larger portion of the total outstanding Bitcoins in comparison with the vast majority of other Bitcoiners) it is nothing. They are used to returns in the 1000% + range. What does this mean? That there is fast-growing pressure on those long-term Bitcoiners to take profit. The risk of holding on longer for meagre returns compared with what they have already achieved is far too great, when the speed with which a crash can occur is well-known to them. They know only too well what the last bear market felt like.
To balance this vast amounts of new bullish capital are required to make up for the disproportionate amount of wealth held by the few long-term players. But new players with half a brain can see that they have missed out on an 800% rise since this time last year, and now have the prospect (according to the most reputable traders here) of at best a 100% return at an extremely risky possible end-of-trend moment with more downside beckoning.
Trade active
⋅
Opened shorts in the 3320-3330 range
Comment
⋅
... Euros
Trade closed manually
⋅
Closed short with 0.25% loss on account. Looks like the bulls will take this a bit higher but I'm not going long, rather looking for new shorts in a few days time.
I'm being bearish since late August and the recent rally near Sep 15th did not change my mind, against the majority that seems bullish now.
I believe there is another relevant factor you did not mention: there might be still a lot of Chinese holders still to sell before their exchanges shutdown. The market has priced that in advance based on news but I am not confident that it was able to price it all, and considering the weak momentum and volumes as you mentioned, I am expecting another strong dip in the next couple weeks, maybe even deeper than the previous 2500eur. Then next month comes elections in China which might change again the path they track... and my expectations here: a rollback of their decisions and consequent huge uptrend by EOY.
@BRRD great analysis considering far more parameters than I do, and aligned with my non-technical feelings, makes me feel supported for the reasons I didn't know (lol).
Another question: you profile as investor or long-term tradings, right? (not really looking after the daily movements as most)
I'm not sure whether there will be a large dump precipitated by Chinese selling or not. Sometimes the idea seems logical to me, sometimes not so much! Let's see what happens...
If a large correction is upon us now (which is the view I favour) then we will go much lower than 2500 quite soon (couple of weeks or so). IMO it will be in the mid 1000s (test / maybe go a little under the area hit on July 16). But I might be wrong, and will take a loss on my short positions if this doesn't happen (will update when I close here).
Regarding my trading profile, I'm an amateur with no formal trading. In a nutshell I've tended to do much better on a few long-term trades than shorter term. I am taking notes on my mentality here as I feel it is very important to have a different mindset for different styles.
There are all kinds of classic views and styles that seem to conflict: such as "First profit best profit / always take profit off the table" and "Hold / add to your winning positions"! It's important to get these views in context and it's something that I'm trying to build into my short-term trading mentality.
But at the end of it all, in crypto the no.1 thing to do is control your greed / fear. It is ludicrous to get greedy thinking "I've missed out on that huge bull run!" when crypto in its current incarnation will always remain extremely volatile - therefore the next bull run is just around the corner, relatively speaking. The key then is to wait patiently until the overall sentiment has really, deeply changed... then look in a relaxed manner for long term entry points.
The roller coaster will keep going wildly up and down for years to come. It's the only sure thing in crypto!
walien
⋅
@BRRD, though amateur, you do not sound to have an amateur mindset.
Thank you for your complete and detailed insights!
I got the whole idea and support the bearish approach despite the multiple bullish 'predictions' we see around... but could not understand why your 'opened short' price is above the current price on the chart you reference above. Is that typo or I missed some concept here?
BRRD
⋅
@walien, I posted the idea first, took out the shorts later when the price had gone up a bit.
I still hold the shorts. Will update here when I close them.
@walien, I closed my shorts now - please see update.
I'm waiting for it to go up a bit more to see if new short ideas present themselves.
walien
⋅
@BRRD, I must say that I am still not convinced of the strength of these moves, so I chose to stay away from the current trend (yeah, I will miss it, unless it shows power) and keep my fiat as fiat for the moment I consider to be it. Right now I'm following the 'better safe than sorry'.
BRRD
⋅
@walien, me too. Actually I will take a small short again soon. I think that as long as I keep any potential loss to 0.25% of my account or under then the gain of the correct short will outweigh the loss. But in the worst case scenario probably only twice more until the all-time high is reached and then reassess if price breaks it.
I believe there is another relevant factor you did not mention: there might be still a lot of Chinese holders still to sell before their exchanges shutdown. The market has priced that in advance based on news but I am not confident that it was able to price it all, and considering the weak momentum and volumes as you mentioned, I am expecting another strong dip in the next couple weeks, maybe even deeper than the previous 2500eur. Then next month comes elections in China which might change again the path they track... and my expectations here: a rollback of their decisions and consequent huge uptrend by EOY.
@BRRD great analysis considering far more parameters than I do, and aligned with my non-technical feelings, makes me feel supported for the reasons I didn't know (lol).
Another question: you profile as investor or long-term tradings, right? (not really looking after the daily movements as most)